SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of October 2017
Commission File Number: 001-06439

SONY CORPORATION
(Translation of registrant's name into English)

1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN
(Address of principal executive offices)

The registrant files annual reports under cover of Form 20-F.

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F,
 
Form 20-F  X
Form 40-F __
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, Yes No X
 
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-______
 
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
SONY CORPORATION
 
(Registrant)
   
   
 
By:  /s/  Kenichiro Yoshida
 
                (Signature)
 
Kenichiro Yoshida
 
Executive Deputy President and
 
Chief Financial Officer
 
Date: October 31, 2017
List of materials

Documents attached hereto:
 
i) Press release Announcing Consolidated Financial Results for the Second Quarter Ended September 30, 2017 

1-7-1 Konan, Minato-ku
Tokyo 108-0075 Japan
 
 
 
News & Information
 
   No. 17-103E
October 31, 2017
Consolidated Financial Results
for the Second Quarter Ended September 30, 2017

Tokyo, October 31, 2017 -- Sony Corporation today announced its consolidated financial results for the second quarter ended September 30, 2017 (July 1, 2017 to September 30, 2017).

 
 
(Billions of yen, millions of U.S. dollars, except per share amounts)         
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change in yen
     
2017
*
Sales and operating revenue
 
¥
1,688.9
   
¥
2,062.5
     
+22.1
%
 
$
18,252
 
Operating income
   
45.7
     
204.2
     
+346.4
     
1,807
 
Income before income taxes
   
40.5
     
198.6
     
+390.0
     
1,757
 
Net income attributable to Sony Corporation’s stockholders
   
4.8
     
130.9
     
+2,602.4
     
1,158
 
Net income attributable to Sony Corporation’s stockholders per share of common stock:
                               
    - Basic
 
¥
3.84
   
¥
103.57
     
+2,597.1
   
$
0.92
 
    - Diluted
   
3.76
     
101.35
     
+2,595.5
     
0.90
 

* U.S. dollar amounts have been translated from yen, for convenience only, at the rate of 113 yen = 1 U.S. dollar, the approximate Tokyo foreign exchange market rate as of September 30, 2017.

All amounts are presented on the basis of Generally Accepted Accounting Principles in the U.S. (“U.S. GAAP”).

Sony Corporation and its consolidated subsidiaries are together referred to as “Sony”.

The average foreign exchange rates during the quarters ended September 30, 2016 and 2017 are presented below.

   
Second Quarter ended September 30
   
   
2016
   
2017
   
Change
   
The average rate of yen
                      
                           
1 U.S. dollar
 
¥
102.4
   
¥
111.0
     
7.7
%
(yen depreciation)
                           
1 Euro
   
114.3
     
130.4
     
12.4
%
(yen depreciation)

Consolidated Results for the Second Quarter Ended September 30, 2017

Sales and operating revenue (“Sales”) increased by 22.1% compared to the same quarter of the previous fiscal year (“year-on-year”) to 2,062.5 billion yen.  This significant increase was primarily due to the impact of foreign exchange rates and an increase in Game & Network Services (“G&NS”) segment sales.  On a constant currency basis, sales increased 15%.  For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 8.

Operating income increased 158.5 billion yen year-on-year to 204.2 billion yen.  This significant increase was mainly due to the improvements of operating results in the Semiconductors and G&NS segments as well as All Other.

Operating income in the same quarter of the previous fiscal year included 9.4 billion yen in inventory write-downs of certain image sensors for mobile products and net charges of 1.2 billion yen in expenses resulting from the earthquakes in the Kumamoto region in 2016 (“the 2016 Kumamoto Earthquakes”), both recorded in the Semiconductors segment, and a 32.8 billion yen impairment charge related to the transfer of the battery business recorded in All Other.
 
During the current quarter, restructuring charges, net, decreased 31.0 billion yen year-on-year to 1.6 billion yen mainly due to the absence in the current quarter of the above-mentioned impairment charge related to the transfer of the battery business recorded in the same quarter of the previous fiscal year.  Restructuring charges are recorded as an operating expense and are included in operating income.

1

Equity in net income of affiliated companies, recorded within operating income, increased 0.9 billion yen year-on-year to 2.0 billion yen.

The net effect of other income and expenses was an expense of 5.7 billion yen, a deterioration of 0.4 billion yen compared to the same quarter of the previous fiscal year.

Income before income taxes increased 158.0 billion yen year-on-year to 198.6 billion yen.

During the current quarter, Sony recorded 55.8 billion yen of income tax expense, resulting in an effective tax rate of 28.1% which was lower than the effective tax rate of 58.0% in the same quarter of the previous fiscal year.  This lower effective tax rate was mainly due to the fact that Sony Corporation and its national tax filing group in Japan, which has established valuation allowances for deferred tax assets, recorded profits during the current quarter, compared to the losses recorded in the same quarter of the previous fiscal year.

Net income attributable to Sony Corporation’s stockholders, which deducts net income attributable to noncontrolling interests, increased 126.0 billion yen year-on-year to 130.9 billion yen.

Operating Performance Highlights by Business Segment

“Sales and operating revenue” in each business segment represents sales and operating revenue recorded before intersegment transactions are eliminated.  “Operating income (loss)” in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses.  For details regarding each segment’s product categories, please refer to page F-8.  For details regarding business segment realignment, please refer to Note 3 on page F-17.

Mobile Communications (MC)

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Sales and operating revenue
 
¥
168.8
   
¥
172.0
     
+1.9
%
                         
Operating income (loss)
   
3.7
     
(2.5
)
   
 

Sales were 172.0 billion yen, essentially flat year-on-year (a 3% decrease on a constant currency basis).  This was mainly due to the impact of foreign exchange rates as well as an increase in sales of the fixed line communications business, substantially offset by a decrease in unit sales of smartphones.

Operating loss of 2.5 billion yen was recorded, compared to operating income of 3.7 billion yen recorded in the same quarter of the previous fiscal year.  This deterioration was primarily due to a change in the geographic mix of smartphone sales, an increase in the price of key components, as well as the negative impact of the appreciation of the yen against the U.S. dollar, primarily reflecting a high ratio of U.S. dollar-denominated costs, partially offset by reductions in operating costs and marketing expenses.  During the current quarter, there was a 1.2 billion yen negative impact from foreign exchange rate fluctuations (which includes the impact of foreign exchange hedging).

Game & Network Services (G&NS)

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Sales and operating revenue
 
¥
319.9
   
¥
433.2
     
+35.4
%
                         
Operating income
   
19.0
     
54.8
     
+188.3
 
 
2

 
Sales increased 35.4% year-on-year (a 25% increase on a constant currency basis) to 433.2 billion yen.  This significant increase was primarily due to an increase in PlayStation®4 (“PS4”) software sales including sales through the network, the impact of foreign exchange rates, as well as an increase in PS4 hardware sales.

Operating income increased 35.8 billion yen year-on-year to 54.8 billion yen.  This significant increase was primarily due to the above-mentioned increase in sales, partially offset by an increase in selling, general and administrative expenses.  During the current quarter, there was a 3.1 billion yen positive impact from foreign exchange rate fluctuations.

Operating income includes a favorable adjustment of 5.1 billion yen that resulted from the recognition of internal royalties in the current quarter, rather than in the first quarter of the fiscal year ending March 31, 2018.  This adjustment resulted from a discrepancy in the timing of when internal royalties were recognized at the relevant subsidiaries within the segment.

Imaging Products & Solutions (IP&S)

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Sales and operating revenue
 
¥
135.4
   
¥
156.7
     
+15.8
%
                         
Operating income
   
14.9
     
18.9
     
+27.0
 

Sales increased 15.8% year-on-year (a 7% increase on a constant currency basis) to 156.7 billion yen.  This significant increase in sales was mainly due to the impact of foreign exchange rates as well as the absence in the current quarter of the impact from the 2016 Kumamoto Earthquakes in the same quarter of the previous fiscal year.

Operating income increased 4.0 billion yen year-on-year to 18.9 billion yen.  This increase was mainly due to the positive impact of foreign exchange rates and the above-mentioned increase in sales, partially offset by an increase in selling, general and administrative expenses.  During the current quarter, there was a 5.2 billion yen positive impact from foreign exchange rate fluctuations.

Home Entertainment & Sound (HE&S)

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Sales and operating revenue
 
¥
234.9
   
¥
300.9
     
+28.1
%
                         
Operating income
   
17.6
     
24.4
     
+38.9
 

Sales increased 28.1% year-on-year (a 17% increase on a constant currency basis) to 300.9 billion yen.  This significant increase was primarily due to an improvement in the product mix of televisions reflecting a shift to high value-added models, as well as the impact of foreign exchange rates.

Operating income increased 6.8 billion yen year-on-year to 24.4 billion yen.  This significant increase was primarily due to the above-mentioned increase in sales as well as the positive impact of foreign exchange rates, partially offset by an increase in the price of key components and an increase in marketing costs.  During the current quarter, there was a 7.0 billion yen positive impact from foreign exchange rate fluctuations.
 
3

Semiconductors

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Sales and operating revenue
 
¥
193.7
   
¥
228.4
     
+17.9
%
                         
Operating income (loss)
   
(4.2
)
   
49.4
     
 

Sales increased 17.9% year-on-year (a 10% increase on a constant currency basis) to 228.4 billion yen.  This increase was primarily due to a significant increase in unit sales of image sensors for mobile products, as well as the absence of the impact of a decrease in image sensor production due to the 2016 Kumamoto Earthquakes in the same quarter of the previous fiscal year, partially offset by a significant decrease in sales of camera modules, a business which was downsized.

Operating income of 49.4 billion yen was recorded, compared to an operating loss of 4.2 billion yen recorded in the same quarter of the previous fiscal year.  This significant improvement in operating results was primarily due to the impact of the above-mentioned increase in sales, the positive impact of foreign exchange rates, as well as the absence of 9.4 billion yen in inventory write-downs of certain image sensors for mobile products recorded in the same quarter of the previous fiscal year.  During the current quarter, there was a 9.0 billion yen positive impact from foreign exchange rate fluctuations.

Pictures

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Sales and operating revenue
 
¥
192.1
   
¥
244.0
     
+27.0
%
                         
Operating income
   
3.2
     
7.7
     
+140.0
 

The results presented in Pictures are a yen-translation of the results of Sony Pictures Entertainment Inc. (“SPE”), a U.S.-based operation that aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.  Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results is specified as being on “a U.S. dollar basis.”

Sales increased 27.0% year-on-year (a 17% increase on a U.S. dollar basis) to 244.0 billion yen.  The significant increase in sales on a U.S. dollar basis was primarily due to higher sales in Motion Pictures and Media Networks.  Motion Pictures sales increased significantly due to the strong worldwide theatrical performance of Spider-Man: Homecoming.  Media Networks sales increased significantly primarily due to higher advertising and subscription revenues from TEN Sports Network, a sports network in India acquired by SPE in February 2017, and from SPE’s other networks in India.

Operating income increased 4.5 billion yen year-on-year to 7.7 billion yen.  This increase in operating income was primarily due to the above-mentioned increase in sales, partially offset by higher programming and marketing expenses for Media Networks.
 
Music

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Sales and operating revenue
 
¥
150.2
   
¥
206.6
     
+37.5
%
                         
Operating income
   
16.5
     
32.5
     
+96.9
 

The Music segment results include the yen-translated results of Sony Music Entertainment (“SME”) and Sony/ATV Music Publishing LLC (“Sony/ATV”), both U.S.-based operations which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis and the results of Sony Music Entertainment (Japan) Inc., a Japan-based music company which aggregates its results in yen.  The segment also includes equity in net income for EMI Music Publishing (“EMI”), an affiliated company accounted for under the equity method for which Sony records 39.8% of EMI’s net income in the segment’s operating income.

4

Sales increased 37.5% year-on-year (a 32% increase on a constant currency basis) to 206.6 billion yen.  This significant increase in sales was mainly due to higher Visual Media and Platform sales and higher Recorded Music sales.  Visual Media and Platform sales increased significantly due to the continued strong performance of Fate/Grand Order, a game application for mobile devices.  Recorded Music sales increased significantly primarily due to a continued increase in digital streaming revenues.  Best-selling titles during the quarter included Nogizaka46’s Nigemizu, Keyakizaka46’s Masshiro na Mono wa Yogoshitaku naru and DJ Khaled’s Grateful.

Operating income increased 16.0 billion yen year-on-year to 32.5 billion yen.  This increase in operating income was primarily due to the above-mentioned increase in sales.

Financial Services

   
(Billions of yen)
 
   
Second Quarter ended September 30
 
   
2016
   
2017
   
Change
 
Financial services revenue
 
¥
260.5
   
¥
279.2
     
+7.2
%
                         
Operating income
   
33.6
     
36.6
     
+9.0
 

The Financial Services segment results include Sony Financial Holdings Inc. (“SFH”) and SFH’s consolidated subsidiaries such as Sony Life Insurance Co., Ltd. (“Sony Life”), Sony Assurance Inc. (“Sony Assurance”) and Sony Bank Inc. (“Sony Bank”).  The results of Sony Life discussed in the Financial Services segment differ from the results that SFH and Sony Life disclose separately on a Japanese statutory basis.

Financial services revenue increased 7.2% year-on-year to 279.2 billion yen primarily due to an increase in revenue at Sony Life.  Revenue at Sony Life increased 6.6% year-on-year to 246.0 billion yen mainly due to higher insurance premiums revenue reflecting an increase in the policy amount in force, as well as an improvement in investment performance in the separate accountThis improvement in investment performance was mainly due to favorable financial market conditions.

Operating income increased 3.0 billion yen year-on-year to 36.6 billion yen, primarily due to a decline in the loss ratio for automobile insurance at Sony Assurance and the above-mentioned increase in insurance premiums revenue at Sony LifeOperating income at Sony Life increased 1.2 billion yen year-on-year to 32.2 billion yen.

*    *    *    *    *

Consolidated Results for the Six Months ended September 30, 2017

For Consolidated Statements of Income and Business Segment Information for the six months ended September 30, 2016 and 2017, please refer to pages F-3 and F-7 respectively.

Sales for the six months ended September 30, 2017 (“the current six months”) increased 18.7% year-on-year to 3,920.6 billion yen.  This significant increase was primarily due to the impact of foreign exchange rates as well as increases in sales in all segments except for the MC segment.  On a constant currency basis, consolidated sales increased 14% year-on-year.  For further details about the impact of foreign exchange rate fluctuations on sales and operating income (loss), see Note on page 8.  During the current six months, the average rates of the yen were 111.1 yen against the U.S. dollar and 126.3 yen against the euro, which were 5.2% and 6.4% lower, respectively, as compared with the same period in the previous fiscal year.

In the MC segment, sales were essentially flat.  In the G&NS segment, sales increased significantly primarily due to the significant contribution of PS4 software sales including sales through the network.  In the IP&S segment, sales increased significantly as the same period of the previous fiscal year was negatively impacted by the 2016 Kumamoto Earthquakes.  In the HE&S segment, sales increased significantly primarily due to an improvement in the product mix of televisions reflecting a shift to high value-added models, as well as the impact of foreign exchange rates.  In the Semiconductors segment, sales increased significantly primarily due to a significant increase in unit sales of image sensors for mobile products as well as the absence of a decrease in image sensor production in the same period of the previous fiscal year due to the 2016 Kumamoto Earthquakes.  In the Pictures segment, sales increased due to higher advertising and subscription revenues for Media Networks, higher licensing revenues for Television Productions and higher theatrical revenues for Motion Pictures.  In the Music segment, sales increased significantly primarily due to higher Visual Media and Platform sales as well as higher Recorded Music sales.  In the Financial Services segment, revenue increased significantly mainly due to a substantial improvement in investment performance in the separate account at Sony Life, resulting from favorable financial market conditions during the current six months compared to the same period of the previous fiscal year.

5

Operating income increased 259.9 billion yen year-on-year to 361.8 billion yen.  This significant increase was primarily due to a significant improvement in the operating results in the Semiconductors segment.

Operating income in the current six months includes a 27.5 billion yen gain recorded in the Semiconductors segment resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business.  Additionally, 6.7 billion yen and 2.6 billion yen in insurance recoveries, mainly for opportunity losses related to the 2016 Kumamoto Earthquakes, were recorded in the Semiconductors and the IP&S segments, respectively.

Operating income in the same period of the previous fiscal year included a 23.9 billion yen impairment charge against long-lived assets, resulting from the termination of the development and manufacturing of certain high-functionality camera modules for external sale, net charges of 14.7 billion yen in expenses resulting from the 2016 Kumamoto Earthquakes, as well as 11.2 billion yen in inventory write-downs of certain image sensors for mobile products, all recorded in the Semiconductors segment.  Additionally, in All Other, a 32.8 billion yen impairment charge was recorded in the same period of the previous fiscal year, related to the transfer of the battery business.

In the MC segment, operating income decreased year-on-year mainly due to an increase in the price of key components, partially offset by reductions in operating costs.  In the G&NS segment, operating income increased year-on-year primarily due to the contribution of increased PS4 software sales including sales through the network, partially offset by an increase in selling, general and administrative expenses.  In the IP&S segment, operating income increased significantly year-on-year primarily due to the impact of the above-mentioned increase in sales, partially offset by an increase in selling, general and administrative expenses.  In the HE&S segment, operating income increased significantly year-on-year primarily due to an improvement in the product mix of televisions reflecting a shift to high value-added models, partially offset by an increase in the price of key components and an increase in marketing costs.  In the Semiconductors segment, operating results improved significantly compared to the same period of the previous fiscal year.  This improvement was primarily due to the impact of the above-mentioned increase in sales, a gain resulting from the sale of the entire equity interest in a manufacturing subsidiary in the camera module business, and insurance recoveries related to the 2016 Kumamoto Earthquakes in the current six months.  Additionally, in the same period of the previous fiscal year, the Semiconductors segment operating results included the above-mentioned impairment charge against long-lived assets relating to camera modules, net expenses relating to the 2016 Kumamoto Earthquakes, and inventory write-downs of certain image sensors for mobile products.  In the Pictures segment, the operating loss decreased primarily due to the above-mentioned increase in sales partially offset by higher programming and marketing expenses for Media Networks.  In the Music segment, operating income increased significantly primarily due to the above-mentioned increase in sales.  In the Financial Services segment, operating income was essentially flat.

During the current six months, restructuring charges, net, decreased 30.3 billion yen year-on-year to 4.0 billion yen, mainly due to the absence in the current six months of above-mentioned impairment charge related to the transfer of the battery business.  Restructuring charges are recorded as an operating expense and are included in operating income.

Equity in net income of affiliated companies, recorded within operating income, increased 2.8 billion yen year-on-year to 3.1 billion yen.

The net effect of other income and expenses was an expense of 14.4 billion yen, a deterioration of 10.0 billion yen compared to the same period of the previous fiscal year, mainly due to an increase in net foreign exchange losses.

Income before income taxes increased 249.9 billion yen to 347.5 billion yen.

6

During the current six months, Sony recorded 110.2 billion yen of income tax expense, resulting in an effective tax rate of 31.7% which was lower than the effective tax rate of 45.1% in the same period of the previous fiscal year. This lower effective tax rate was mainly due to the fact that Sony Corporation and its national tax filing group in Japan, which has established valuation allowances for deferred tax assets, recorded profits during the current six months, compared to the losses recorded in the same period of the previous fiscal year.

Net income attributable to Sony Corporation’s stockholders increased 185.7 billion yen year-on-year to 211.7 billion yen.

*    *    *    *    *

Cash Flows

For Consolidated Statements of Cash Flows, charts showing Sony’s cash flow information for all segments, all segments excluding the Financial Services segment and the Financial Services segment alone, please refer to pages F-5 and F-16.

Operating Activities: During the current six months, there was a net cash inflow of 266.3 billion yen from operating activities, an increase of 184.8 billion yen, or 226.8% year-on-year.

For all segments excluding the Financial Services segment, there was a 70.0 billion yen net cash inflow, compared to a 158.7 billion yen net cash outflow in the same period of the previous fiscal year.  This change was primarily due to a year-on-year improvement in net income after taking into account non-cash adjustments (including depreciation and amortization, other operating (income) expense, net, deferred income taxes and equity in net (income) loss of affiliated companies), as well as a larger year-on-year increase in notes and accounts payable, trade.  This increase in net cash inflow was partially offset by the negative impact of a larger year-on-year increase in notes and accounts receivable, trade.

The Financial Services segment had a net cash inflow of 210.7 billion yen, a decrease of 42.8 billion yen, or 16.9% year-on-year.  This decrease was primarily due to a decrease in net income after taking into account non-cash adjustments such as depreciation and amortization, including amortization of deferred insurance acquisition costs.

Investing Activities: During the current six months, Sony used 411.8 billion yen of net cash in investing activities, a decrease of 255.9 billion yen, or 38.3% year-on-year.

For all segments excluding the Financial Services segment, there was a net cash outflow of 96.8 billion yen, a decrease of 103.3 billion yen, or 51.6% year-on-year.  This decrease was mainly due to a decrease in payments for fixed asset purchases such as semiconductor manufacturing equipment.

The Financial Services segment used 314.3 billion yen of net cash, a decrease of 152.5 billion yen, or 32.7% year-on-year.  This decrease was mainly due to a year-on-year decrease in payments for investments and advances at Sony Life.

In all segments excluding the Financial Services segment, net cash used in operating and investing activities combined*1 for the current six months was 26.8 billion yen, a decrease of 332.0 billion yen, or 92.5% year-on-year.

Financing Activities: During the current six months, there was a net cash inflow of 179.5 billion yen from financing activities, a decrease of 3.7 billion yen, or 2.0% year-on-year.

For all segments excluding the Financial Services segment, there was a 22.3 billion yen net cash outflow, an increase of 16.4 billion yen, or 278.2% year-on-year.  This increase was mainly due to the absence in the current six months of the issuance of straight bonds compared to the same period of the previous fiscal year, partially offset by a year-on-year decrease in repayment of long-term debt and the absence of the payment for the purchase of Sony/ATV shares from noncontrolling interests in the same period of the previous fiscal year.

In the Financial Services segment, there was a 186.8 billion yen net cash inflow, an increase of 11.7 billion yen, or 6.7% year-on-year.  This increase was primarily due to an increase in long-term debt at Sony Bank.

Total Cash and Cash Equivalents: Accounting for the above factors and the effect of fluctuations in foreign exchange rates, the total outstanding balance of cash and cash equivalents at September 30, 2017 was 1,000.8 billion yen.  Cash and cash equivalents of all segments excluding the Financial Services segment was 649.2 billion yen at September 30, 2017, a decrease of 42.5 billion yen, or 6.1% compared with the balance as of March 31, 2017, and an increase of 319.6 billion yen, or 97.0% compared with the balance as of September 30, 2016.  Sony believes that it continues to maintain sufficient liquidity through access to a total, translated into yen, of 528.3 billion yen of unused committed lines of credit with financial institutions in addition to the cash and cash equivalents balance at September 30, 2017.  Within the Financial Services segment, the outstanding balance of cash and cash equivalents was 351.6 billion yen at September 30, 2017, an increase of 83.2 billion yen, or 31.0% compared with the balance as of March 31, 2017, and an increase of 156.1 billion yen, or 79.8% compared with the balance as of September 30, 2016.

7

*1
Sony has included the information for cash flow from operating and investing activities combined, excluding the Financial Services segment’s activities, as Sony’s management frequently monitors this financial measure and believes this non-U.S. GAAP measurement is important for use in evaluating Sony’s ability to generate cash to maintain liquidity and fund debt principal and dividend payments from business activities other than its Financial Services segment. This information is derived from the reconciliations prepared in the Condensed Statements of Cash Flows on page F-16. This information and the separate condensed presentations shown below are not required or prepared in accordance with U.S. GAAP. The Financial Services segment’s cash flow is excluded from the measure because SFH, which constitutes a majority of the Financial Services segment, is a separate publicly traded entity in Japan with a significant minority interest and it, as well as its subsidiaries, secure liquidity on their own. This measure may not be comparable to those of other companies. This measure has limitations because it does not represent residual cash flows available for discretionary expenditures principally due to the fact that the measure does not deduct the principal payments required for debt service. Therefore, Sony believes it is important to view this measure as supplemental to its entire statement of cash flows and together with Sony’s disclosures regarding investments, available credit facilities and overall liquidity.
 
 
 
A reconciliation of the differences between the Consolidated Statement of Cash Flows reported and cash flows from operating and investing activities combined excluding the Financial Services segment’s activities is as follows:
 
   
(Billions of yen)
       
   
Six months ended September 30
       
   
2016
   
2017
       
                   
Net cash provided by operating activities reported in the consolidated statements of cash flows
 
¥
81.5
   
¥
266.3
       
                       
Net cash used in investing activities reported in the consolidated statements of cash flows
   
(667.6
)
   
(411.8
)
     
     
(586.1
)
   
(145.5
)
  (1)  
                       
Less: Net cash provided by operating activities within the Financial Services segment
   
253.6
     
210.7
    (2)  
                       
Less: Net cash used in investing activities within the Financial Services segment
   
(466.8
)
   
(314.3
)
  (3)  
                       
Eliminations *2
   
14.1
     
15.1
    (4)  
                       
Cash flow used by operating and investing activities combined excluding the Financial Services segment’s activities
 
¥
(358.8
)
 
¥
(26.8
)
  (1)-(2)-(3)+(4)  
 
*2
Eliminations primarily consist of intersegment dividend payments.

 

*    *    *    *    *
Note

Impact of Foreign Exchange Rate Fluctuations on Sales and Operating Income (Loss)
The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the previous fiscal year, or the same quarter of the previous fiscal year, to local currency-denominated monthly sales in the current fiscal year, or the current quarter, respectively.  In the Pictures segment as well as SME and Sony/ATV in the Music segment, the constant currency amounts are after aggregation on a U.S. dollar basis.

The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting the foreign exchange impact on cost of sales and selling, general and administrative expenses (“COGS & SGA”) from the foreign exchange impact on sales.  The foreign exchange impact on sales is calculated by applying the change in the yen’s periodic weighted average exchange rates for the previous fiscal year, or the same quarter of the previous fiscal year, from the current fiscal year, or the current quarter, respectively, to the major transactional currencies in which the sales are denominated.  The foreign exchange impact on COGS & SGA is calculated by applying the same major transactional currencies calculation process to COGS & SGA as for the impact on sales.  Additionally, the MC segment enters into its own foreign exchange hedging transactions.  The impact of those transactions is included in the impact of foreign exchange rate fluctuations on operating income (loss) for that segment.

This information is not a substitute for Sony’s consolidated financial statements measured in accordance with U.S. GAAP.  However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the operating performance of Sony.

*    *    *    *    *
8

Outlook for the Fiscal Year Ending March 31, 2018

The forecast for consolidated results for the fiscal year ending March 31, 2018, as announced on August 1, 2017, has been revised as follows:

   
(Billions of yen)
   
Change - October Forecast from
   
March 31, 2017
Results
   
August
Forecast
   
October
Forecast
   
March 31, 2017
Results
 
August
Forecast
Sales and operating revenue
 
¥
7,603.3
   
¥
8,300
   
¥
8,500
     
+11.8
%
   
+2.4
%
Operating income
   
288.7
     
500
     
630
   
+¥341.3
bil   
+¥130.0
bil 
Income before income taxes
   
251.6
     
470
     
600
   
+¥348.4
bil   
+¥130.0
bil 
Net income attributable to Sony Corporation’s stockholders
   
73.3
     
255
     
380
   
+¥306.7
bil   
+¥125.0
bil 

Assumed foreign exchange rates for the remainder of the fiscal year ending March 31, 2018 are the following:

(For your reference)
 
Remainder of the current fiscal year
Assumed foreign exchange rates for the current fiscal year at the time of the August forecast*
 
Consolidated forecast and forecasts for each segment
Consolidated forecast
Forecasts for each segment
1 U.S. dollar
approximately 112 yen
approximately 110 yen
approximately 112 yen
1 Euro
approximately 130 yen
approximately 120 yen
approximately 128 yen

* The impact of the difference between the assumed foreign exchange rates used for the consolidated forecast and the rates used for each segment was included in the August forecast for All Other, Corporate and elimination.

Consolidated sales for the fiscal year ending March 31, 2018 are expected to be higher than the August forecast primarily due to a revision in the assumed foreign exchange rates for the remainder of the current fiscal year and increased sales in the Music and HE&S segments.

Consolidated operating income is expected to be higher than the August forecast mainly due to the above-mentioned revision in the assumed foreign exchange rates and a decrease in allocations for contingencies incorporated into the August forecast for All Other, Corporate and elimination, as well as expected increases in operating income in the Semiconductors, Music and HE&S segments.

Restructuring charges for the Sony Group are expected to be approximately 15 billion yen in the fiscal year ending March 31, 2018, which remains unchanged from the August forecast, compared to 60.2 billion yen recorded in the fiscal year ended March 31, 2017.  Restructuring charges are recorded as an operating expense and are included in the above-mentioned forecast for operating income.
9

The forecast for each business segment for the fiscal year ending March 31, 2018 has been revised as follows:

   
(Billions of yen)
   
Change - October Forecast from
   
March 31, 2017
Results
   
August
Forecast
   
October
Forecast
   
March 31, 2017
Results
 
August
Forecast
Mobile Communications
                             
Sales and operating revenue
 
¥
759.1
   
¥
820
   
¥
780
     
+2.7
%
   
-4.9
%
Operating income
   
10.2
     
5
     
5
   
- ¥5.2
bil     
 
Game & Network Services
                                       
Sales and operating revenue
   
1,649.8
     
1,980
     
2,000
     
+21.2
%
   
+1.0
%
Operating income
   
135.6
     
180
     
180
   
+¥44.4
bil     
 
Imaging Products & Solutions
                                       
Sales and operating revenue
   
579.6
     
650
     
650
     
+12.1
%
   
 
Operating income
   
47.3
     
72
     
72
   
+¥24.7
bil     
 
Home Entertainment & Sound
                                       
Sales and operating revenue
   
1,039.0
     
1,170
     
1,200
     
+15.5
%
   
+2.6
%
Operating income
   
58.5
     
58
     
76
   
+¥17.5
bil   
+ ¥18.0
bil 
Semiconductors
                                       
Sales and operating revenue
   
773.1
     
860
     
880
     
+13.8
%
   
+2.3
%
Operating income (loss)
   
(7.8
)
   
130
     
150
   
+¥157.8
bil   
+ ¥20.0
bil 
Pictures
                                       
Sales and operating revenue
   
903.1
     
1,020
     
1,020
     
+12.9
%
   
 
Operating income (loss)
   
(80.5
)
   
39
     
39
   
+¥119.5
bil     
 
Music
                                       
Sales and operating revenue
   
647.7
     
630
     
730
     
+12.7
%
   
+15.9
%
Operating income
   
75.8
     
75
     
94
   
+¥18.2
bil   
+¥19.0
bil 
Financial Services
                                       
Financial services revenue
   
1,087.5
     
1,170
     
1,170
     
+7.6
%
   
 
Operating income
   
166.4
     
170
     
170
   
+¥3.6
bil     
 
All Other, Corporate and Elimination
                                 
Operating loss
   
(116.7
)
   
(229
)
   
(156
)
 
- ¥39.3
bil   
+¥73.0
bil 
Consolidated
                                       
Sales and operating revenue
   
7,603.3
     
8,300
     
8,500
     
+11.8
%
   
+2.4
%
Operating income
   
288.7
     
500
     
630
   
+¥341.3
bil   
+¥130.0
bil 

Mobile Communications
Sales are expected to be lower than the August forecast primarily due to an expected decrease in smartphone unit sales.  The forecast for operating income remains unchanged primarily due to the expected decrease in sales as well as an increase in the price of key components, being substantially offset by an expected reduction in operating costs.

Game & Network Services
Sales are expected to be slightly higher than the August forecast primarily due to an expected increase in PS4 hardware sales as well as network sales.  The forecast for operating income remains unchanged due to the above-mentioned increase in sales as well as the expected favorable impact of foreign exchange rates, substantially offset by stronger promotions for the holiday season.

Home Entertainment & Sound
Sales are expected to be higher than the August forecast primarily due to an expected increase in television unit sales.  Operating income is expected to be higher than the August forecast due to an expected decrease in the price of key components, as well as the above-mentioned increase in sales.

Semiconductors
Sales and operating income are expected to be higher than the August forecast primarily due to an expected increase in image sensor unit sales for mobile products.

Music
Sales and operating income are expected to be significantly higher than the August forecast primarily due to higher-than-expected Visual Media and Platform sales as well as Recorded Music sales.

10

The forecasts for sales and operating income for the IP&S, Pictures and Financial Services segments remain unchanged from the August forecast.

The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in the future.  Accordingly, future market fluctuations could further impact the current forecast.

The forecast for additions to long-lived assets, depreciation and amortization, as well as research and development expenses for the current fiscal year remains unchanged from the August forecast:

Consolidated

   
(Billions of yen)
       
   
March 31, 2017
Results
   
October
Forecast
   
Change from
March 31, 2017 Results
 
Additions to Long-lived Assets*
 
¥
272.2
   
¥
330
     
+21.2
%
[additions to property, plant and equipment (included above)
   
184.0
     
235
     
+27.7
]
[additions to intangible assets (included above)
   
88.2
     
95
     
+7.7
]
Depreciation and amortization**
   
327.0
     
355
     
+8.5
 
[for property, plant and equipment (included above)
   
169.3
     
175
     
+3.4
]
[for intangible assets (included above)
   
157.8
     
180
     
+14.1
]
Research and development expenses
   
447.5
     
450
     
+0.6
 
Excluding additions from business combinations.
** Including amortization expenses for deferred insurance acquisition costs.

Sony without Financial Services

   
(Billions of yen)
       
   
March 31, 2017
Results
   
October
Forecast
   
Change from
March 31, 2017 Results
 
Additions to Long-lived Assets*
 
¥
257.6
   
¥
310
     
+20.3
%
[additions to property, plant and equipment (included above)
   
179.3
     
230
     
+28.3
]
[additions to intangible assets (included above)
   
78.3
     
80
     
+2.1
]
Depreciation and amortization
   
280.0
     
280
     
+0.0
 
[for property, plant and equipment (included above)
   
167.4
     
170
     
+1.6
]
[for intangible assets (included above)
   
112.6
     
110
     
-2.3
]
Excluding additions from business combinations.

This forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances.  Actual results may differ materially from those included in this forecast due to a variety of factors.  See “Cautionary Statement” below.

11

Cautionary Statement
Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:
(i)
the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;
(ii)
foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets and liabilities are denominated;(iii)
(iii)
Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences;
(iv)
Sony’s ability and timing to recoup large-scale investments required for technology development and production capacity;
(v)
Sony’s ability to implement successful business restructuring and transformation efforts under changing market and regulatory conditions;
(vi)
changes in laws, regulations and government policies in the markets in which Sony operates, including those related to taxation and corporate social responsibility;
(vii)
Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;
(viii)
Sony’s continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments correctly (particularly in the electronics businesses);
(ix)
Sony’s ability to maintain product quality and customer satisfaction with its products and services;
(x)
the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures and other strategic investments;
(xi)
significant volatility and disruption in the global financial markets or a ratings downgrade;
(xii)
Sony’s ability to forecast demands, manage timely procurement and control inventories;
(xiii)
Sony's reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, supply and distribution of its products, and its other business operations;
(xiv)
the outcome of pending and/or future legal and/or regulatory proceedings;
(xv)
shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment;
(xvi)
the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment;
(xvii)
the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information, potential business disruptions or financial losses; and
(xviii)
risks related to catastrophic disasters or similar events.
Risks and uncertainties also include the impact of any future events with material adverse impact.
 

Investor Relations Contacts:     
Tokyo
New York
London
Atsuko Murakami
Justin Hill
Toshiyuki Takahashi
+81-(0)3-6748-2111
+1-212-833-6722
+44-(0)1932-816-000

IR home page: https://www.sony.net/IR/
Presentation slides: https://www.sony.net/SonyInfo/IR/library/er.html
 
12

 
(Unaudited)
                 
Consolidated Financial Statements
                 
Consolidated Balance Sheets
                 
   
(Millions of yen) 
 
   
March 31
   
September 30
   
Change from
 
ASSETS
 
2017
   
2017
   
March 31, 2017
 
Current assets:
                 
Cash and cash equivalents
 
¥
960,142
   
¥
1,000,832
   
¥
+40,690
 
Marketable securities
   
1,051,441
     
1,139,572
     
+88,131
 
Notes and accounts receivable, trade
   
1,006,961
     
1,222,444
     
+215,483
 
Allowance for doubtful accounts and sales returns
   
(53,150
)
   
(48,365
)
   
+4,785
 
Inventories
   
640,835
     
930,657
     
+289,822
 
Other receivables
   
223,632
     
367,932
     
+144,300
 
Prepaid expenses and other current assets
   
525,861
     
507,551
     
-18,310
 
 Total current assets
   
4,355,722
     
5,120,623
     
+764,901
 
                         
Film costs
   
336,928
     
367,282
     
+30,354
 
                         
Investments and advances:
                       
Affiliated companies
   
149,371
     
154,832
     
+5,461
 
Securities investments and other
   
9,962,422
     
10,284,195
     
+321,773
 
     
10,111,793
     
10,439,027
     
+327,234
 
                         
Property, plant and equipment:
                       
Land
   
117,293
     
114,844
     
-2,449
 
Buildings
   
666,381
     
682,677
     
+16,296
 
Machinery and equipment
   
1,842,852
     
1,840,950
     
-1,902
 
Construction in progress
   
28,779
     
34,482
     
+5,703
 
     
2,655,305
     
2,672,953
     
+17,648
 
Less-Accumulated depreciation
   
1,897,106
     
1,908,900
     
+11,794
 
     
758,199
     
764,053
     
+5,854
 
                         
Other assets:
                       
Intangibles, net
   
584,185
     
575,425
     
-8,760
 
Goodwill
   
522,538
     
540,257
     
+17,719
 
Deferred insurance acquisition costs
   
568,837
     
585,540
     
+16,703
 
Deferred income taxes
   
98,958
     
76,431
     
-22,527
 
Other
   
323,396
     
328,468
     
+5,072
 
     
2,097,914
     
2,106,121
     
+8,207
 
                         
Total assets
 
¥
17,660,556
   
¥
18,797,106
   
¥
+1,136,550
 
                         
                         
LIABILITIES AND EQUITY
                       
Current liabilities:
                       
Short-term borrowings
 
¥
464,655
   
¥
520,649
   
¥
+55,994
 
Current portion of long-term debt
   
53,424
     
227,058
     
+173,634
 
Notes and accounts payable, trade
   
539,900
     
871,328
     
+331,428
 
Accounts payable, other and accrued expenses
   
1,394,758
     
1,447,350
     
+52,592
 
Accrued income and other taxes
   
106,037
     
163,306
     
+57,269
 
Deposits from customers in the banking business
   
2,071,091
     
2,121,162
     
+50,071
 
Other
   
591,874
     
584,688
     
-7,186
 
 Total current liabilities
   
5,221,739
     
5,935,541
     
+713,802
 
                         
Long-term debt
   
681,462
     
587,838
     
-93,624
 
Accrued pension and severance costs
   
396,715
     
403,929
     
+7,214
 
Deferred income taxes
   
432,824
     
424,957
     
-7,867
 
Future insurance policy benefits and other
   
4,834,492
     
5,015,392
     
+180,900
 
Policyholders’ account in the life insurance business
   
2,631,073
     
2,747,113
     
+116,040
 
Other
   
314,771
     
288,854
     
-25,917
 
Total liabilities
   
14,513,076
     
15,403,624
     
+890,548
 
                         
Redeemable noncontrolling interest
   
12,058
     
12,830
     
+772
 
                         
Equity:
                       
Sony Corporation’s stockholders’ equity:
                       
Common stock
   
860,645
     
862,156
     
+1,511
 
Additional paid-in capital
   
1,275,337
     
1,277,486
     
+2,149
 
Retained earnings
   
984,368
     
1,180,298
     
+195,930
 
Accumulated other comprehensive income
   
(618,769
)
   
(590,334
)
   
+28,435
 
Treasury stock, at cost
   
(4,335
)
   
(4,415
)
   
-80
 
     
2,497,246
     
2,725,191
     
+227,945
 
                         
Noncontrolling interests
   
638,176
     
655,461
     
+17,285
 
Total equity
   
3,135,422
     
3,380,652
     
+245,230
 
Total liabilities and equity
 
¥
17,660,556
   
¥
18,797,106
   
¥
+1,136,550
 
 
 
F-1

 
Consolidated Statements of Income
                 
   
(Millions of yen, except per share amounts)
 
   
Three months ended September 30
 
   
2016
   
2017
   
Change from 2016
 
Sales and operating revenue:
                 
Net sales
 
¥
1,411,918
   
¥
1,764,916
       
Financial services revenue
   
258,703
     
277,434
       
Other operating revenue
   
18,327
     
20,181
       
     
1,688,948
     
2,062,531
     
+22.1
%
                         
Costs and expenses:
                       
Cost of sales
   
1,049,268
     
1,234,646
         
Selling, general and administrative
   
338,347
     
386,279
         
Financial services expenses
   
225,166
     
240,305
         
Other operating (income) expense, net
   
31,568
     
(901
)
       
     
1,644,349
     
1,860,329
     
+13.1
 
                         
Equity in net income of affiliated companies
   
1,148
     
2,026
     
+76.5
 
                         
Operating income
   
45,747
     
204,228
     
+346.4
 
                         
Other income:
                       
Interest and dividends
   
2,130
     
4,252
         
Other
   
687
     
511
         
     
2,817
     
4,763
     
+69.1
 
                         
Other expenses:
                       
Interest
   
4,352
     
2,730
         
Foreign exchange loss, net
   
2,425
     
6,298
         
Other
   
1,267
     
1,398
         
     
8,044
     
10,426
     
+29.6
 
                         
Income before income taxes
   
40,520
     
198,565
     
+390.0
 
                         
Income taxes
   
23,500
     
55,751
         
                         
Net income
   
17,020
     
142,814
     
+739.1
 
                         
Less - Net income attributable to noncontrolling interests
   
12,178
     
11,962
         
                         
Net income attributable to Sony Corporation’s stockholders
 
¥
4,842
   
¥
130,852
     
+2,602.4
%
 
Per share data:
                       
Net income attributable to Sony Corporation’s stockholders
                       
— Basic
 
¥
3.84
   
¥
103.57
     
+2,597.1
%
— Diluted
   
3.76
     
101.35
     
+2,595.5
 
 
Consolidated Statements of Comprehensive Income
                       
   
(Millions of yen) 
 
   
Three months ended September 30
 
     
2016
     
2017
   
Change from 2016
 
                         
Net income
 
¥
17,020
   
¥
142,814
     
+739.1
%
                         
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
   
(37,726
)
   
(1,469
)
       
Unrealized gains on derivative instruments
   
405
     
594
         
Pension liability adjustment
   
2,821
     
2,339
         
Foreign currency translation adjustments
   
(16,065
)
   
16,502
         
                         
Total comprehensive income (loss)
   
(33,545
)
   
160,780
     
 
                         
Less - Comprehensive income (loss) attributable to noncontrolling interests
   
(5,845
)
   
13,178
         
                         
Comprehensive income (loss) attributable to Sony Corporation’s stockholders
 
¥
(27,700
)
 
¥
147,602
     
%
 
 
F-2

 
Consolidated Statements of Income
                 
   
(Millions of yen, except per share amounts)
 
   
Six months ended September 30
 
   
2016
   
2017
   
Change from 2016
 
Sales and operating revenue:
                 
Net sales
 
¥
2,774,435
   
¥
3,293,559
       
Financial services revenue
   
489,612
     
578,794
       
Other operating revenue
   
38,100
     
48,291
       
     
3,302,147
     
3,920,644
     
+18.7
%
                         
Costs and expenses:
                       
Cost of sales
   
2,064,891
     
2,349,738
         
Selling, general and administrative
   
676,444
     
743,658
         
Financial services expenses
   
406,797
     
495,563
         
Other operating (income) expense, net
   
52,441
     
(27,012
)
       
     
3,200,573
     
3,561,947
     
+11.3
 
                         
Equity in net income of affiliated companies
   
365
     
3,142
     
+760.8
 
                         
Operating income
   
101,939
     
361,839
     
+255.0
 
                         
Other income:
                       
Interest and dividends
   
5,357
     
13,037
         
Other
   
1,780
     
1,644
         
     
7,137
     
14,681
     
+105.7
 
                         
Other expenses:
                       
Interest
   
8,153
     
7,246
         
Foreign exchange loss, net
   
810
     
19,266
         
Other
   
2,577
     
2,549
         
     
11,540
     
29,061
     
+151.8
 
                         
Income before income taxes
   
97,536
     
347,459
     
+256.2
 
                         
Income taxes
   
43,975
     
110,247
         
                         
Net income
   
53,561
     
237,212
     
+342.9
 
                         
Less - Net income attributable to noncontrolling interests
   
27,553
     
25,489
         
                         
Net income attributable to Sony Corporation’s stockholders
 
¥
26,008
   
¥
211,723
     
+714.1
%
 
Per share data:
                       
Net income attributable to Sony Corporation’s stockholders
                       
— Basic
 
¥
20.61
   
¥
167.61
     
+713.2
%
— Diluted
   
20.20
     
164.06
     
+712.2
 
 
Consolidated Statements of Comprehensive Income
                       
   
(Millions of yen)
 
   
Six months ended September 30
 
     
2016
     
2017
   
Change from 2016
 
                         
Net income
 
¥
53,561
   
¥
237,212
     
+342.9
%
                         
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
   
(17,331
)
   
(4,658
)
       
Unrealized gains on derivative instruments
   
260
     
229
         
Pension liability adjustment
   
6,047
     
4,644
         
Foreign currency translation adjustments
   
(107,063
)
   
30,087
         
                         
Total comprehensive income (loss)
   
(64,526
)
   
267,514
     
 
                         
Less - Comprehensive income attributable
                       
to noncontrolling interests
   
19,155
     
27,356
         
                         
 
                       
Comprehensive income (loss) attributable to Sony Corporation’s stockholders
 
¥
(83,681
)
 
¥
240,158
     
%
 
 
 
F-3

 
 
Supplemental equity and comprehensive income information
             
 
(Millions of yen)
 
   
Sony Corporation’s
stockholders’ equity 
   
Noncontrolling
interests 
   
Total equity
 
 
Balance at March 31, 2016
 
¥
2,463,340
   
¥
661,070
   
¥
3,124,410
 
Exercise of stock acquisition rights
   
1,834
   
     
1,834
 
Stock based compensation
   
833
   
     
833
 
                         
Comprehensive income:
                       
Net income
   
26,008
     
27,553
     
53,561
 
Other comprehensive income, net of tax –
                       
Unrealized losses on securities
   
(11,430
)
   
(5,901
)
   
(17,331
)
Unrealized gains on derivative instruments
   
260
   
     
260
 
Pension liability adjustment
   
5,959
     
88
     
6,047
 
Foreign currency translation adjustments
   
(104,478
)
   
(2,585
)
   
(107,063
)
Total comprehensive income (loss)
   
(83,681
)
   
19,155
     
(64,526
)
                         
Dividends declared
   
(12,625
)
   
(16,434
)
   
(29,059
)
Transactions with noncontrolling interests shareholders and other
   
(59,598
)
   
(42,424
)
   
(102,022
)
Balance at September 30, 2016
 
¥
2,310,103
   
¥
621,367
   
¥
2,931,470
 
 
 
 
(Millions of yen)
 
   
Sony Corporation’s
stockholders’ equity  
   
Noncontrolling
interests
   
Total equity
  
 
Balance at March 31, 2017
 
¥
2,497,246
   
¥
638,176
   
¥
3,135,422
 
Issuance of new shares
   
676
   
     
676
 
Exercise of stock acquisition rights
   
2,344
   
     
2,344
 
Stock based compensation
   
1,159
   
     
1,159
 
                         
Comprehensive income:
                       
Net income
   
211,723
     
25,489
     
237,212
 
Other comprehensive income, net of tax –
                       
Unrealized gains (losses) on securities
   
(4,884
)
   
226
     
(4,658
)
Unrealized gains on derivative instruments
   
229
   
     
229
 
Pension liability adjustment
   
4,630
     
14
     
4,644
 
Foreign currency translation adjustments
   
28,460
     
1,627
     
30,087
 
Total comprehensive income
   
240,158
     
27,356
     
267,514
 
                         
Dividends declared
   
(15,794
)
   
(12,134
)
   
(27,928
)
Transactions with noncontrolling interests shareholders and other
   
(598
)
   
2,063
     
1,465
 
Balance at September 30, 2017
 
¥
2,725,191
     
655,461
     
3,380,652
 
 
 
F-4

 
Consolidated Statements of Cash Flows
           
   
(Millions of yen)
 
   
Six months ended September 30
 
   
2016
   
2017
 
Cash flows from operating activities:
           
Net income
 
¥
53,561
   
¥
237,212
 
Adjustments to reconcile net income to net cash
               
provided by operating activities:
               
Depreciation and amortization, including amortization of deferred
               
insurance acquisition costs
   
181,060
     
169,962
 
Amortization of film costs
   
122,837
     
160,142
 
Accrual for pension and severance costs, less payments
   
7,054
     
2,583
 
Other operating (income) expense, net
   
52,441
     
(27,012
)
Gain on sale or devaluation of securities investments, net
   
(13
)
   
(167
)
(Gain) loss on revaluation of marketable securities held in the financial
               
services business for trading purposes, net
   
41,800
     
(47,765
)
Loss on revaluation or impairment of securities investments held
               
in the financial services business, net
   
2
     
50
 
Deferred income taxes
   
(12,382
)
   
8,160
 
Equity in net (income) loss of affiliated companies, net of dividends
   
5,133
     
(1,312
)
Changes in assets and liabilities:
               
Increase in notes and accounts receivable, trade
   
(154,618
)
   
(197,747
)
Increase in inventories
   
(256,549
)
   
(272,386
)
Increase in film costs
   
(175,952
)
   
(188,281
)
Increase in notes and accounts payable, trade
   
213,623
     
309,160
 
Increase in accrued income and other taxes
   
38,529
     
49,662
 
Increase in future insurance policy benefits and other
   
170,468
     
258,762
 
Increase in deferred insurance acquisition costs
   
(43,691
)
   
(43,394
)
Increase in marketable securities held in the financial services
               
business for trading purposes
   
(49,387
)
   
(44,002
)
Increase in other current assets
   
(87,477
)
   
(125,652
)
Increase (decrease) in other current liabilities
   
(86,249
)
   
23,571
 
Other
   
61,293
     
(5,242
)
Net cash provided by operating activities
   
81,483
     
266,304
 
                 
Cash flows from investing activities:
               
Payments for purchases of fixed assets
   
(205,300
)
   
(130,254
)
Proceeds from sales of fixed assets
   
6,946
     
6,760
 
Payments for investments and advances by financial services business
   
(603,241
)
   
(461,046
)
Payments for investments and advances
               
(other than financial services business)
   
(7,423
)
   
(10,969
)
Proceeds from sales or return of investments and collections of advances
               
by financial services business
   
143,080
     
152,561
 
Proceeds from sales or return of investments and collections of advances
               
(other than financial services business)
   
4,307
     
4,219
 
Proceeds from sales of businesses
   
3,262
     
18,684
 
Other
   
(9,271
)
   
8,258
 
Net cash used in investing activities
   
(667,640
)
   
(411,787
)
                 
Cash flows from financing activities:
               
Proceeds from issuance of long-term debt
   
203,081
     
72,430
 
Payments of long-term debt
   
(140,400
)
   
(16,299
)
Increase in short-term borrowings, net
   
123,646
     
55,904
 
Increase in deposits from customers in the financial services business, net
   
114,687
     
88,344
 
Dividends paid
   
(12,633
)
   
(12,649
)
Payment for purchase of Sony/ATV shares from noncontrolling interests
   
(76,565
)
   
 
Other
   
(28,555
)
   
(8,207
)
Net cash provided by financing activities
   
183,261
     
179,523
 
                 
Effect of exchange rate changes on cash and cash equivalents
   
(55,535
)
   
6,650
 
                 
Net increase (decrease) in cash and cash equivalents
   
(458,431
)
   
40,690
 
Cash and cash equivalents at beginning of the fiscal year
   
983,612
     
960,142
 
                 
Cash and cash equivalents at end of the period
 
¥
525,181
   
¥
1,000,832
 
 
 
F-5

 
Business Segment Information
                 
   
(Millions of yen)
 
   
Three months ended September 30
 
Sales and operating revenue
 
2016
   
2017
   
Change
 
                   
Mobile Communications
                 
Customers
 
¥
166,814
   
¥
169,818
     
+1.8
%
Intersegment
   
1,956
     
2,223
         
Total
   
168,770
     
172,041
     
+1.9
 
                         
Game & Network Services
                       
Customers
   
304,848
     
414,255
     
+35.9
 
Intersegment
   
15,032
     
18,949
         
Total
   
319,880
     
433,204
     
+35.4
 
                         
Imaging Products & Solutions
                       
Customers
   
134,037
     
155,170
     
+15.8
 
Intersegment
   
1,335
     
1,550
         
Total
   
135,372
     
156,720
     
+15.8
 
                         
Home Entertainment & Sound
                       
Customers
   
233,901
     
300,770
     
+28.6
 
Intersegment
   
976
     
163
         
Total
   
234,877
     
300,933
     
+28.1
 
                         
Semiconductors
                       
Customers
   
161,038
     
193,407
     
+20.1
 
Intersegment
   
32,710
     
34,956
         
Total
   
193,748
     
228,363
     
+17.9
 
                         
Pictures
                       
Customers
   
192,026
     
243,738
     
+26.9
 
Intersegment
   
86
     
265
         
Total
   
192,112
     
244,003
     
+27.0
 
                         
Music
                       
Customers
   
146,629
     
202,837
     
+38.3
 
Intersegment
   
3,582
     
3,729
         
Total
   
150,211
     
206,566
     
+37.5
 
                         
Financial Services
                       
Customers
   
258,703
     
277,434
     
+7.2
 
Intersegment
   
1,807
     
1,790
         
Total
   
260,510
     
279,224
     
+7.2
 
                         
All Other
                       
Customers
   
81,791
     
95,592
     
+16.9
 
Intersegment
   
19,572
     
17,228
         
Total
   
101,363
     
112,820
     
+11.3
 
                         
Corporate and elimination
   
(67,895
)
   
(71,343
)
   
 
Consolidated total
 
¥
1,688,948
   
¥
2,062,531
     
+22.1
%
 
Game & Network Services (“G&NS”) intersegment amounts primarily consist of transactions with All Other.
Semiconductors intersegment amounts primarily consist of transactions with the Mobile Communications (“MC”) segment, the G&NS segment and the Imaging Products & Solutions (“IP&S”) segment.
All Other intersegment amounts primarily consist of transactions with the Pictures segment, the Music segment and the G&NS segment.
Corporate and elimination includes certain brand and patent royalty income. 
 
   
(Millions of yen)
 
   
Three months ended September 30
 
Operating income (loss)
   
2016
     
2017
   
Change
 
                         
Mobile Communications
 
¥
3,698
   
¥
(2,453
)
   
%
Game & Network Services
   
18,992
     
54,750
     
+188.3
 
Imaging Products & Solutions
   
14,860
     
18,870
     
+27.0
 
Home Entertainment & Sound
   
17,556
     
24,387
     
+38.9
 
Semiconductors
   
(4,184
)
   
49,370
     
 
Pictures
   
3,207
     
7,696
     
+140.0
 
Music
   
16,515
     
32,514
     
+96.9
 
Financial Services
   
33,563
     
36,599
     
+9.0
 
All Other
   
(32,602
)
   
(28
)
   
 
Total
   
71,605
     
221,705
     
+209.6
 
                         
Corporate and elimination
   
(25,858
)
   
(17,477
)
   
 
Consolidated total
 
¥
45,747
   
¥
204,228
     
+346.4
%
 
The 2016 segment disclosure above has been reclassified to reflect the change in the business segment classification discussed in Note 3.
Operating income (loss) is sales and operating revenue less costs and expenses, and includes equity in net income (loss) of affiliated companies.
Corporate and elimination includes headquarters restructuring costs and certain other corporate expenses, including the amortization of certain intellectual property assets such as the cross-licensing of intangible assets acquired from Ericsson at the time of the Sony Mobile Communications acquisition, which are not allocated to segments.
 
F-6

 
<
Business Segment Information
                 
   
(Millions of yen)
 
   
Six months ended September 30
 
Sales and operating revenue
 
2016
   
2017
   
Change
 
                   
Mobile Communications
                 
Customers
 
¥
351,682
   
¥
348,884
     
-0.8
%
Intersegment
   
3,011
     
4,344
         
Total
   
354,693
     
353,228
     
-0.4
 
                         
Game & Network Services
                       
Customers
   
615,616
     
737,306
     
+19.8
 
Intersegment
   
34,643
     
43,960
         
Total
   
650,259
     
781,266
     
+20.1
 
                         
Imaging Products & Solutions
                       
Customers
   
254,402
     
309,287
     
+21.6
 
Intersegment
   
3,196
     
3,068
         
Total
   
257,598
     
312,355
     
+21.3
 
                         
Home Entertainment & Sound